Mumbai: The Indian rupee on Thursday rebounded from its morning lows and gained for a fourth session against the US dollar after crude oil prices fell over 2% amid worries about oversupply and the outlook for the global economy. At 1.21pm, the home currency was trading at 70.07 a dollar, up 0.49% from its Wednesday’s close of 74.22. Earlier, the rupee opened 0.4% lower. The 10-year gilt yield stood at 7.27% from its previous close of 7.22%. Bond yields and prices move in opposite directions.

International benchmark Brent crude futures were down over $1, or 1.82 percent, at $56.20 per barrel, after climbing almost 2 percent the session before. So far this year, Crude oil is down 15%. They are currently down 34% from their 2018 peak of $ 86.29 per barrel seen on 3 Oct

Overnight, the Fed went ahead with a widely expected quarter-point rate increase, but policy makers scaled back the number of hikes they expect next year from three to two.

According to RBI minutes, a majority of members cited upside risks to inflation and emerging downside risks to growth for keeping unchanged policy rates. The members also flagged the possibility of a fiscal slippage influencing the inflation outlook, heightening market volatility and crowding out of private investment.

“We expect inflation to remain near 5% for the rest of financial year. Lower oil prices (if persist) is a reasonable positive for inflation, going ahead. With the change in the RBI governor, we expect RBI to alter its policy stance to ‘neutral’ from the current ‘calibrated tightening’ and see an increased likelihood of a 25bps policy rate reduction as inflation levels are expected to remain soft and CPI is expected to remain below RBI’s 4% target for the next year" said PhillipCapital in a 14 December note.

So far this year, the rupee has declined 8.7%, while foreign investors have sold $4.44 billion and $7.34 billion in the equity and debt markets, respectively.

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